How do you turn an online business acquisition into a successful long-term investment?
It’s no secret that entrepreneurship comes with perpetual challenges. And it doesn’t really matter whether you’re starting from scratch or acquiring an existing online business.
The truth is, your chances of failure are much higher than those of success. According to data from the U. S. Bureau of Labor Statistics, the 10-year survival rate for companies in the private sector is less than 35%.
With this in mind, do your due diligence. That is, learn how to weed out all options that don’t carry the required potential to lead to financial gains. Fortunately, you can do it by paying attention to a few KPIs.
In this guide, we’ve compiled a list of the key website metrics to assess when buying an online business, along with some tips for improving them fast.
Conversion Metrics
The point of acquiring a business isn’t just to enter a market. It’s just as much to acquire an existing platform that can help you make a profit (regardless of whether you need to make any tweaks).
With this in mind, some of the first things you need to assess about an online business are its conversion-related metrics.
By having a clear insight into this aspect of the brand’s performance, you’ll gauge whether it holds the potential to reach your investment goals.
So, what KPIs do you need to assess?
Conversion Rates (Sales and Non-Sales)
Although conversion rates (CR) aren’t the be-all and end-all of business performance, they’re a great indicator of whether an online business is worth investing in.
As a general rule of thumb, a sales conversion rate between 2% and 5% is ideal. Statistically, most businesses gravitate toward the lower end of this scale.
Of course, this KPI hugely depends on the sector a business populates. Consumable and high-frequency purchases regularly outperform high-ticket and luxury items.
Nevertheless, what you need to keep in mind when assessing this website metric is that it’s not just sales that can indicate a brand’s success potential.
Non-sales conversions can be equally valuable, especially as they’re crucial for unlocking the ability to nurture satisfied and loyal customers, all the while keeping customer acquisition costs to a minimum.
According to the latest data from Unbounce, the median landing page conversion rate across all industries is 6.6%.
Improving Conversion Rates
Conversion rate optimization is a complex topic.
However, the truth is that improving this core metric doesn’t have to be too challenging — as long as you know the reason behind its poor performance.
Simple fixes for both sales and non-sales CR include web design optimization, improving the site’s technical performance, perfecting calls to action, reducing the perceived risk of conversion, leveraging trust signals, etc.
Using tools like Unbounce can help build better-performing landing pages, while services such as Optimizely can help you perform A/B tests to see whether you need to improve your conversion-oriented webpage elements.
However, in some cases, the reason websites don’t convert well boils down to a poor market fit, subpar audience targeting tactics, a misalignment with customer needs and values, etc.
In these cases, removing conversion obstacles will call for a much more intricate fix. This kind of solution will require time and resources, and it may not even pay off in some cases.
So, when assessing an online business for acquisition, don’t just look at the conversion rates at their face value. Instead, go into a deeper analysis of why they are where they are and closely consider whether the performance is something you can fix or if it’s going to end up being an insurmountable obstacle on your road to success.
Average Order Value (AOV)
How much people spend on a website is an excellent indicator of its profitability and growth potential.
When looking at key website metrics when buying an online business, pay attention to AOV.
AOV will help you understand how much every potential customer is worth (especially when considering CLV — customer lifetime value). This KPI will also help you better understand people’s typical buying behavior with the brand, which can uncover valuable opportunities for improvement.
Quick Fixes to Boost AOV
The most common tactic for improving average order value relies on cross-selling and upselling tactics.
These are easy to incorporate into most websites.
For SaaS brands, price anchoring tends to work best; however, it can be equally effective when applied to retail.
As for ecommerce, you can use a variety of tools to elevate AOV and CLV. These include upsell apps like ReConvert, subscription solutions like Recharge, cross-selling tools like Nosto, etc.
Customer Retention Rates
Customer loyalty directly correlates to growth potential.
According to Harvard Business Review, increasing customer retention rates by as little as 5% can boost profits between 25% and 95%.
So, if you wish to assess the growth and longevity potential of an online business, look at the rate at which its customers keep returning for more purchases. A solid retention rate (70% to 80%) will be a great indicator of a profitable venture.
Lower than that, and you might be looking at core business issues like poor product quality, unsatisfactory CX, or inferior customer service.
Can You Improve Customer Retention Rates Quickly?
Absolutely!
The primary method for achieving this goal relies on delivering a better customer experience.
This means providing customers with high-quality products. Furthermore, work to make shopping with your new brand convenient. Fast and affordable shipping, which you can do with solutions like Easyship, is a great start.
Moreover, you can accomplish similarly positive improvements by providing customers with subscription options, personalizing your marketing campaigns, and creating attractive loyalty programs.
Traffic Metrics
Consumers’ on-site buying behavior is an excellent indicator of a brand’s profitability and growth potential. However, when investing in an online business, you need to evaluate its traffic-related metrics.
These KPIs won’t just uncover existing value and profitability. They’re also excellent indicators of sustainability and growth potential, as well as the amount of work you’ll be required to do to reach your goals after the acquisition has gone through.
The great news is that you won’t need to invest in advanced tools to get your insights. In fact, the Google Analytics platform will likely provide you with all the answers you need.
So, what are the most important KPIs you need to look at?
Traffic Volume
The number of unique visitors who have visited a site is an excellent indicator of reach.
It determines the business’ growth potential. And it clearly shows the effectiveness of the brand’s inbound marketing strategy.
Furthermore, when looking to invest in a profitable online business, consistent or growing traffic volume can indicate solid brand awareness, high conversion potential, and a positive outlook for the future.
Improving Traffic Volume
The great news is that there are many ways to fix low traffic.
Investing in SEO, content marketing, paid advertising, and social media marketing are all excellent methods to attract more web visits and boost reach (even with a minimal budget).
However, the number of unique visitors to a site isn’t always enough to determine its profitability and growth potential.
That’s why it’s essential to evaluate traffic volume along with more detailed engagement metrics.
Engagement Metrics
When assessing engagement-related website metrics to acquire an online business, start with pageviews.
On the surface, this KPI may not seem that important — as it only says how many pages people have viewed on the website. However, when evaluated in correlation with traffic volume, pageviews can actually say a lot about engagement rates.
High engagement rates obviously indicate strong interest in the brand’s offer. They’re also an excellent method to see whether the website’s internal structure, navigation, or content requires overhauls post-acquisition.
Secondly, assess the website’s bounce rates. This KPI indicates the number of visitors who have landed on a webpage and closed their browser within five seconds.
As a rule of thumb, a solid bounce rate should be lower than 40%. Anything above that may indicate an issue with the site’s UX performance. Furthermore, a high bounce rate can be a sign of poorly optimized website traffic.
Finally, to gauge user engagement when assessing website metrics, pay attention to time on page/site.
Longer interactions between web visitors and pages show a positive engagement (and sales potential). They also indicate good targeting and marketing practices, which are crucial for ensuring that a brand’s value propositions resonate with its prospects. They hugely contribute to overall conversion potential.
How to Easily Improve Engagement
Less-than-ideal engagement rates aren’t a great sign when assessing an online business you want to acquire. But they don’t necessarily have to be a red flag.
Instead, they are often simply indicators that a site will require work to reach its maximum potential.
In general, there are two primary methods for improving engagement metrics.
On the one hand, focusing on a site’s technical performance can be a great way to elevate UX and provide visitors with a better browsing experience.
Data shows that site speed and responsiveness directly impact bounce and engagement metrics. That’s why tools like PageSpeed Insights can be an exceptional method to uncover hidden UX issues.
On the other hand, low engagement rates often indicate subpar content optimization.
Aligning USPs and site content with an audience’s unique needs and expectations is a crucial factor for encouraging engagement.
Moreover, brand differentiation tactics are also an excellent method to win over potential prospects, especially in today’s world of almost unlimited choice.
Traffic Sources
Before you acquire an online business, you need to understand where its customers come from.
Essentially, evaluating a brand’s traffic sources isn’t necessarily done to understand its marketing strategies (and their effectiveness). Instead, the point of assessing this website metric lies in determining the business’s growth potential and risk level.
A solid amount of organic traffic — whether from search engines or social media — is always an exceptional signal.
It demonstrates a high level of consumer interest. It’s a great indicator of potential long-term growth. Finally, it suggests low marketing (and customer acquisition) costs, which is an excellent basis for higher profits.
On the other hand, a site that gets most of its traffic from paid sources may be a risky venture.
For starters, it relies on paid ads to attract customers. Plus, it might not enjoy a high loyalty rate, which is a red flag regarding long-term profitability.
How to Fix Limited Traffic Sources
Ideally, the online business you’re assessing needs to have versatile traffic sources. This will allow you the best possible growth outcomes.
Generally, businesses with limited traffic sources need to be avoided as they can be risky investments that might not pay off.
Nevertheless, you can fix small irregularities.
Expanding content distribution channels with tools like Buffer, investing in SEO, and elevating customer loyalty with email marketing are all excellent methods to diversify a brand’s reach (and revenue) sources.
However, prepare for the fact that you’ll have a lot of work ahead of you if you choose this path.
SEO Performance
Lastly, when assessing website metrics when acquiring an online business, it’s essential to understand how it performs on search engine results pages.
Seeing as 47% of consumers begin their buying journeys on search engines, SERP rankings will inevitably affect your future brand’s ability to attract, engage, and convert new customers without having to rely on paid ads.
On the whole, there are a few SEO-related KPIs to pay attention to, regardless of whether you’re assessing a SaaS, ecommerce, or content site.
Domain Authority
MOZ’s Domain Authority ranking score is a predictor of how well a website can perform on SERPs compared to its competitors.
Even though it’s not a direct ranking factor, it is an excellent way to compare a business against its competitors, evaluate its performance, and uncover potential growth opportunities.
How to Quickly Improve DA
The key to elevating a site’s DA lies in adopting solid SEO practices.
High-quality backlinks, on-page SEO, and improving UX are all great methods to boost performance. But the key is, as always, investing in high-quality, unique content that resonates with your brand’s target audience.
Keyword Rankings
How well a website ranks for relevant keywords directly impacts its ability to attract customers.
According to research, the #1 organic position on Google is 24 times more likely to compel a user to click than its #10 counterpart.
With this in mind, you need to know whether the site you’re assessing ranks for relevant high-volume and long-tail keywords.
It’s fixable if it doesn’t. But it does mean you’ll have to spend some of your post-purchase resources on implementing solid SEO practices.
How to Fix Keyword Rankings
In addition to prioritizing content quality over quantity, one of the best tactics to improve keyword rankings involves optimizing resources to align with user intent.
Additionally, updating and expanding existing resources can be a great way to align with Google’s EEAT guidelines. These guidelines require high-ranking content to demonstrate experience, expertise, authoritativeness, and trustworthiness.
Click-Through Rate
A high click-through rate is an excellent sign that a website has what it takes to attract new customers.
In general, a CTR above 3% is considered good for SEO and paid ads, though it’s always good to aim for just a bit higher than average.
Technically speaking, a higher CTR indicates that the meta title and meta descriptions of a page are compelling enough to make a business stand out on SERPs.
How to Improve CTR
The great thing about CTRs is that they can be easy to fix (as long as your content aligns with user needs and intent).
Generally, do your best to optimize title tags and meta descriptions to reflect the value your content offers, as well as to set web visitors’ expectations regarding what they will find upon landing on your site.
Backlink Profile
High-quality backlinks for reputable websites are not just a ranking factor for SEO. They’re an excellent signal that a site’s content is valuable. Plus, they indicate credibility and signify a positive reputation in the brand’s target industry.
When assessing an online business for acquisition, ensure you look at the quality of the backlinks (not just the quantity).
In general, the aim should be to minimize low-quality links, as they could lead to Google penalties.
How to Build Better Backlinks
The best thing you can do when building a strong backlink profile is to invest in quality content production and hire a team of experts who’ll improve your backlink profile.
Other than that, you can:
- explore guest posting possibilities
- use tools like Semrush to discover backlink opportunities
- submit your local business to relevant directories and citations, which will help with your local SEO
Final Thoughts
Assessing key website metrics when acquiring an online business can seem daunting. But it’s one of the most important steps toward ensuring a solid investment.
The KPIs outlined in this guide are an excellent start when doing your due diligence.
Of course, remember that you don’t need a potential investment to be perfect. Instead, it needs to be perfect for you.
So align your choice with your growth and profit expectations and pay attention to any improvements you’ll have to make after the acquisition. Lastly, don’t hesitate to hire support, as it might just help you turn a promising venture into a huge win.
